Small firms are still in need of helping hand
The overarching goal of the National Development Programme (NDP) is to reduce inequality significantly in SA by 2030 “through uniting South Africans, unleashing the energies of its citizens, growing an inclusive economy, building capabilities and enhancing the capability of the state and leaders to work together to solve complex problems”.
SA’s socioeconomic development prior to 1994 was systemically unequal, uneven and unjust.
While South Africans can be proud of the political and human rights transformations that have taken place since, the socioeconomic transformation efforts aimed at tackling the triple challenges of poverty, inequality and unemployment have in many respects not succeeded to the extent required.
The systemic exclusion of the majority of the population persists and requires sustained effort to be addressed meaningfully. Investing in small and medium-sized enterprises (SMEs), especially black- and women-owned SMEs, represents a critical lever for “growing an inclusive economy”, as they are critical to the development and wellbeing of any society. A strong and vibrant SME community can contribute significantly to the way the society lives and works.
The developmental effect of investing in SMEs can be increased by access to finance and providing them with much needed support to enhance their sustainability; appreciating their contribution to the creation and maintenance of jobs and acknowledging the contribution of broadening of the tax base from SME sustainability.
Although it is true that Rome was not built in a day, it is not unreasonable to expect visible progress towards greater inclu- sion of black and women entrepreneurs, particularly in growth sectors where participation has been limited.
It is estimated that more than 80% of formal businesses in SA are SMEs and that they collectively contribute 50%-60% to GDP. SMEs play a significant role in realising the inclusive growth agenda and their continued development should be encouraged through a favourable policy environment that improves the entrepreneurial ecosystem for SMEs and promotes economic growth in general.
The term entrepreneurship is defined by the willingness to take risks, plan, organise and manage a business venture.
A generation ago, young people only thought of following well-defined career paths. However, the formal sector’s employment opportunities are unable to support the growing number of young people looking for jobs every year.
To promote entrepreneurship as a viable career option, the cultural barriers to entrepreneurship need to be eradicated. The education system must also equip young people with skills required to be successful entrepreneurs.
The government has developed various policy instruments with the objective of achieving an inclusive economy. They have been aggregated within the strategic framework of broadbased black economic empowerment (B-BBEE).
These interventions have all been directed towards transforming the structure of the economy in a manner that promotes spatial integration, high levels of decent employment and demographic transformation of industrial assets.
The Black Industrialists Programme, in particular, promotes the direct involvement of black people in the origination, creation, significant ownership, management and operation of industrial enterprises that derive value from the manufacturing of goods and services with the view to unlocking the productive potential of SA’s capital assets for employment locally.
These, and many other such initiatives, should be promoted so entrepreneurs can benefit from them.
Both the public and private sectors need to focus on a concerted, collaborative effort to support the work of SMEs by providing them with procurement opportunities.
The prospects for growth is laid upon the shoulders of SMEs, but they can only succeed if the public and private sectors work together to bring about change and foster opportunities for economic growth.
In boom times, and tough economic times such as SA is going through now, big corporations and government departments should make every effort to adhere to payment deadlines when working with SMEs as late payments continue to be a challenge for small businesses. Most SMEs continually report struggling with late payments, which negatively affects their profitability and sustainability.
SMEs drive and shape innovation and contribute to the growth of the economy.
For SA to achieve inclusive growth, these businesses should essentially be treated as national assets to be cultivated, motivated and recognised to the greatest possible extent.
IT IS ESTIMATED THAT MORE THAN 80% OF FORMAL BUSINESSES ARE SMES AND THAT THEY CONTRIBUTE 50%-60% TO GDP